Lakers will reportedly avoid the NBA's second apron of luxury taxes

The Lakers are heading toward another critical offseason and apparently are making it known there is a limit for them. What would it mean? Does it matter?

Few things are more likely to get me to overreact than the idea of an organization like the Los Angeles Lakers, that essentially has a money printing machine in one of their offices, setting spending limits lower than their competition. So, when Jake Fischer of Yahoo Sports hops on my show and says they’re doing just that, of course my wheels start spinning.

Thing is: This is brand new territory for the entire league, so even I feel like we have to pause and examine what it might look like, though, again, spending less than your competition and understanding you are almost assuredly setting a limit on your offseason only months after getting four games from the finals doesn’t sit well with me, spiritually.

Let’s start with what Fischer said on the topic:

”I really think that new second apron in this new CBA, I really think the Lakers are going to try to avoid that if possible… That’s basically been communicated to me as a marching order.”

Alrighty.

So, again, if the starting point here is: “Why are you setting limits heading in without knowing how the offseason is going to play out,” I’m fine with that as the first question. It’s why I asked the follow-up I did. Who else is treating the tax apron this way?

Even further, finding out the Milwaukee Bucks, a minuscule market compared to Los Angeles, has no problem residing above that tax line, absolutely makes my eye twitch. It’s one thing to hear the Golden State Warriors or Los Angeles Clippers are prepared to spend. That goes without saying at this point. But Milwaukee? You can’t keep up with Milwaukee right after this run?

As it pertains specifically to the Lakers, having seen what being a little too tax conscious has done to them in the past (hey did y’all see Alex Caruso is a first-time all-league defender now?), yeah, hearing about any of this should drive fans insane. How did the Lakers not learn their lessons from that?

All that said, though, we should probably dive into what avoiding this tax apron would look like. This isn’t an unwillingness to pay any taxes whatsoever. This is Jeanie Buss reportedly telling her team to avoid this specific and particularly punitive tax line.

Potential Roster Costs

As of now, the luxury tax threshold for the upcoming season is set at $165 million. The second apron is set at that number, plus $17.5 million. So the second apron for the 2024-’25 season will be a shade under $182.5 million.

The Lakers are going to have four players under guaranteed contract heading into this summer: LeBron James ($46.9M), Anthony Davis ($40.6M), Jarred Vanderbilt ($4.7M) and Max Christie ($1.7M) for a total of $99.3M.

Austin Reaves and Rui Hachimura are both in line for significant raises and the Lakers, as of the time of this writing, are planning for both to be back. As I wrote, I think Reaves and Hachimura come back for 4/$56M and 4/$70. Now, it depends on contract structure but, for simplicity’s sake, let’s just average it out¹. Reaves’ $14M and Hachimura’s $17.5M add $31.5M to that previous total, bringing it to $130.8M.

Now, technically speaking, the most Reaves can make this year is a little more than $11M. That $3M is going to matter, so put a pin in that.

D’Angelo Russell is obviously a lot more complicated than either Reaves or Hachimura but Fischer predicted on my show that he’s going to get a a two-year deal worth $40 million or so. I came in a little higher but let’s just roll with Fischer for now and add $20M, bringing the Lakers’ total to $150.8M, meaning they’ll have only $40M to work with to fill out the roster beyond their slated starting five.

Little tricky, but seems doable.

Malik Beasley’s contract next year has zero guaranteed money but if the Lakers do retain him, it’ll cost $16.5M. Mo Bamba is in a similar situation, where none of his $10.3M next year is guaranteed. L.A. used too much draft capital on both to just let them walk, though, so even if it isn’t them specifically, my guess is the Lakers use both those cap slots, bringing their running total to $177.6M.

The Lakers also have a first-round pick this summer who would cost $2.9M. If they choose to use it, will have access to a taxpayer midlevel exception (TPMLE) contract at just over $7M, plus a bi-annual exception worth just under $4.5M — all totaled would cost $14.4, and bring the Lakers well over the second apron with half the roster still needing to be filled out.

Remember what I said about Reaves and the $3M gap between averaging out a 4/$56M deal and what he can actually make this season? That would bring that full total under the apron temporarily, until the Lakers start adding minimum contracts to full out the roster. So yeah, it matters, as will every dollar they commit to the likes of Hachimura, Russell, and the potential returns if they decide to trade Beasley and Bamba.

So, cuts will likely need to be made and exceptions will probably have to go unused, which, again, sucks if all you’re looking at is the Lakers’ spending compared to their direction competition. And trust me, the last thing I would ever do is make excuses for a team not wanting to spend a certain amount of money for the sake of bloated tax payments.

Roster-building Ramifications

What makes this situation different from what led to Caruso’s departure is this isn’t just about tax money. Teams that go above that $190M figure are going to be seriously hampered in what they can do to continue adding to their team. On top of scaled up luxury tax payments (which, again I don’t care about), if you exceed that number, you will not be allowed to use your TPMLE, sign buyout players or take back more money in trades. There will also be limits on the picks those teams can use in trades², too, and, if a team is in that second apron for another year in any of the next four, their first round pick that second year in the apron will move to the end of the first round, regardless of their record.

(A quick tangent before we refocus on the Lakers, but I do have to say, as I haven’t in written form anywhere else to this point, that I find all of this absolutely stupid and hugely shortsighted by the league. You want teams to spend. The NBA thrives off of superteams and doesn’t get as much from parity as, say, the NFL, where casual fans tune into games regardless of whether or not their team is playing. It’s one thing to say teams at a certain level of spending should have to pay more. I completely agree! Just like I think billionaires should spend more in taxes. But taking away tools to make teams better because they’ve drafted well or have shown a willingness to spend is what a league run amok by cheapskate owners looks like. It’s terrible. Awful. Just a stupid, stupid policy.)

So unlike with Caruso, where the Lakers just let someone who started for them in a finals clinching game walk rather than re-sign him to the altogether reasonable contract he eventually got, we do have to consider the consequences of jumping into that highest category of NBA spenders.

Not having access to their TPMLE hurts quite a bit as those players can seriously help compared to minimum level players. Not getting to use that exception would’ve meant no Lonnie Walker IV this season and could essentially mean not retaining Dennnis Schröder next year.

L.A. has historically been a landing spot for buyout players, but in recent years, that flow has subsided and even there, it’s pretty rare those guys make a meaningful difference. One option going away would certainly suck (and given Chris Paul seems likely to be traded and bought out, this is worth nothing), but overall, this isn’t a huge factor for me.

What is a huge factor, though, are the potential draft-related ramifications.

The Lakers are already limited in terms of the number of picks they can send out, so not being able to trade a 2030 first could limit their team building more than we know right now — though given their reluctance at the deadline to part with both the ‘27 and ‘29 picks, it might not matter. We do have to mention that.

What really scares me, though, is the notion that if the Lakers are in this same apron, say next year or any of the following three (which is altogether possible given the numbers and lengths of contracts I’ve mentioned), their pick would automatically get worse. At some point, James and Davis are going to depart and the Lakers are going to have to potentially build through the draft again. Their spending now affecting that makes me pretty damn nervous.

So look, while my initial inclination after hearing Fischer’s reporting is to throw a bit of a tantrum and pound the table talking about commitment to winning, it could very well be that those teams in that second apron having their hands tied the way they will could seriously hold them back — as the league intends them to be.

In order to truly understand the ramifications of this approach, we not only have to wait to see the roster that gets pieced together with these marching orders, but also will probably have to look back in a few years to see how effective the league’s attempts at legislating parity were. As shocking as this might be coming from me, my advice right now is to sit back and wait to let it all play it out.

1. This isn’t normal and there is usually upwards scaling but we don’t need to get into all that.

2. Teams in that second apron won’t be allowed to trade first-round picks seven years into the future.